The US stocks fell on Tuesday following the lowered growth forecasts by the International Monetary Fund (IMF) for the years 2015 and 2016.
IMF’s reduced outlook also encouraged hopes that the central banks would take more aggressive policy measures to improve the economy.
The lower forecasts implied reduced fuel demand through 2016, contributing to another decline in crude oil, which pressured energy names in spite of some bullish findings from big firms in the sector. The S&P energy index lost 0.5 percent.
The IMF forecasts were cut by 0.3 percentage points for both years. The global agency also advised major economies to maintain their accommodative monetary policies in order to avoid rise in real interest rates as cheaper oil leads to increase in deflation risk.
Equity research analyst Kim Forrest, of Pittsburgh-based Fort Pitt Capital Group in, said, “It looks like the Fed is super happy to pass that torch to the next central bank, and that would be the ECB as our contestant today. The problem is that while things have improved and our banks are much more stable, it’s not necessarily a driver for higher economic growth.”
The European Central Bank (ECB) is likely to meet on Thursday and announce a bond buying program in order to boost the flagging economy of the region.
The Dow Jones industrial average declined 0.32 percent or 56.35 points to 17,455.22, while the S&P 500 fell 0.14 percent or 2.76 points to 2,016.66. On the other hand, the Nasdaq Composite added 0.15 percent or 6.97 points to 4,641.36.
US crude dipped 4.1 percent to USD 46.69 a barrel, maintaining the commodity- down over 55 percent since June – near its lowest level since the year 2009.